An international lending institution has announced it will reduce its involvement in Uzbekistan because of the government's poor human rights record. The move means Uzbekistan will lose some foreign loans. The move is also a blow to the Uzbek government's efforts to polish its image abroad. The European Bank for Reconstruction and Development (EBRD) says it can no longer continue full-scale involvement in Uzbekistan.

In a telephone interview, bank spokesman Jeff Hiday says the Uzbek government has made little headway in improving human rights, as the bank mandated one year ago. "What we found was that there had been very limited progress on these benchmarks, which meant that we felt that we could no longer conduct business as usual in Uzbekistan," he said.

The bank cited lack of political freedom, continued detention and torture of political and religious dissidents, and sharp curbs on the activities of human rights groups and non-governmental organizations. Mr. Hiday says Uzbekistan also failed to make any substantial economic reforms. He added, "You find some areas where there is perhaps even some regress, and some areas where there was some progress, and some areas where things were little changed."

Uzbekistan's president, Islam Karimov, has solidly aligned his government with the U.S.-led anti-terrorism effort and allowed U.S. bases on his country's soil. But human rights groups have sharply criticized the Karimov government for the arbitrary detention of an estimated 7,000 political and religious dissidents.

The government says it is under attack by Islamic extremists. Following a recent wave of bombings across the country that killed more than 40 people, Foreign Minister Sofik Sodoyev characterized the attacks as a "full-scale war on all of us" and urged Western countries and institutions not to cut aid to Uzbekistan.

The EBRD is jointly owned by some 60 countries, with the United States as the largest shareholder. It was founded in 1991 after the collapse of the Soviet bloc to help nurture new democracies in a market environment. It is a "cousin" to larger, better-known international lending institutions, such as the IMF and the World Bank. But it is different in that it uses criteria like human rights and democratic reform as benchmarks for determining who gets aid.

Since its founding, the EBRD has loaned Uzbekistan only about $740 million - a fraction of the nearly $27 billion it has disbursed among the 27 former communist countries where the bank works.

The bank will not cease all activities in Uzbekistan. It says it plans to continue assistance to the private sector, aiding public sector projects that directly help the Uzbek people, such as improving water and heating, and financing cross-border projects. The bank will do another review one year from now.